Llangewydd Court Ground Rent Estate v James Anthony Ralph & Anor

A deferment rate established in a guidance case should ordinarily be followed in enfranchisement valuations. It may be displaced by evidence relating to the particular property or locality, or by compelling evidence that changed circumstances have rendered the guidance rate generally incorrect. Evidence of changed interest rates must be supported by robust, properly attributed data and expert evidence in economics or financial forecasting. Anecdotal material, newspaper reports and valuation evidence alone will ordinarily be insufficient. The appeal failed because the evidence did not meet that threshold.

The landlord appealed from the Leasehold Valuation Tribunal for Wales’ determination of the premium payable for the enfranchisement of a leasehold house. The LVT adopted a deferment rate of 5% for the first reversion and freehold reversion, reflecting the guidance in Earl Cadogan and Cadogan Estates Limited v Sportelli and an additional allowance associated with lower long-term growth outside prime central London.

The landlord challenged the risk-free element of the Sportelli rate in light of reduced interest rates and argued that the additional allowance was no longer appropriate after changing work patterns during the Covid-19 pandemic. The central issue was whether the evidence was sufficiently compelling to displace the guidance.

1. Outcome. The appeal was dismissed. The LVT’s decision stood.
2. Status of Sportelli. The deferment rate in Earl Cadogan and Cadogan Estates Limited v Sportelli, [2007] 1 EGLR 153, is not a legal precedent because the rate and its calculation method are not propositions of law. It is nevertheless a guidance case which tribunals may follow to avoid repeated valuation disputes and inconsistent results.
3. The Court of Appeal had approved both the decision and its guidance status in Earl Cadogan v Sportelli, [2007] EWCA Civ 1042. The possibility remained open for different evidence to be adduced outside prime central London.
4. A challenge may succeed where evidence concerning the particular property or locality requires a different rate. It may also succeed generally if compelling evidence shows that circumstances have changed so that the Sportelli rate is no longer correct. The latter threshold is demanding.
5. The evidence concerning the risk-free rate consisted largely of base-rate information, newspaper material and unsupported or unattributed figures. Although the Lord Chancellor’s personal-injury discount rate was a significant point, the appellant did not provide expert evidence explaining its significance or demonstrating what the risk-free rate should be. Appropriate evidence would ordinarily include expertise in economics or financial forecasting and robust, properly attributed data.
6. The challenge to the additional allowance associated with Zuckerman v Trustees of the Calthorpe Estate, [2009] UKUT 235 (PC), was also unsupported. The newspaper cuttings were anecdotal and did not address property values. The LVT could therefore reach no other conclusion on the evidence before it, although its reasons would have been improved by acknowledging and explaining the appellant’s arguments.

1. Upper Tribunal (Lands Chamber). The appeal from the LVT’s decision dated 6 January 2021 was dismissed and the LVT’s decision stood.